US July car sales fall by double digits

General Motors Corporation, Ford Motor Company, Toyota Motor Corp and other automakers say their US sales fell by double-digits in July.

US July car sales fall by double digits

01 August 2008By Dee-Ann Durbin

General Motors Corporation, Ford Motor Company, Toyota Motor Corp and other automakers say their US sales fell by double-digits in July as they struggled to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles.

Automakers were expecting July sales to be at their lowest level in more than a decade as sales of trucks and four-wheel drives continued to plummet and new troubles in the auto leasing market further wrecked consumers' confidence. And they said things could get worse before they get better.

"We expect the second half of 2008 will be more challenging that the first half as economic and credit conditions weaken," Ford's marketing chief Jim Farley said in a statement.

GM said its sales plunged 26 per cent, led by a 35 per cent decline in sales of trucks and SUVs. Some car models showed strength, with Chevrolet Malibu sales jumping 79 per cent from the same month a year ago. But even GM's car sales fell 12 per cent as consumers looked elsewhere for fuel efficiency.

Earlier on Friday, GM reported a $US15.5-billion ($A16.5 billion) second-quarter loss, the third-worst quarterly performance in the company's history, as North American sales plummeted and GM faced expenses from labour unrest and its massive restructuring plan.

Ford said its US sales fell 15 per cent compared with the same month a year ago. Its car sales were flat, and sales of the Focus small car rose 16 per cent. But sales of Ford's trucks and four-wheel drives continued their steep decline, falling 22 per cent.

Toyota said its sales fell 12 per cent last month, led by a 27 per cent drop in truck and four-wheel drives sales. Sales of its Prius hybrid fell 8 per cent as Toyota failed to keep up with growing demand for the fuel-efficient car.

Toyota Motor Sales USA president Jim Lentz said Toyota is accelerating production of four-cylinder engines to meet demand. Toyota also announced last month it plans to begin producing the Prius in the US in 2010 to boost the numbers available for the US market.

"Having the industry's most fuel-efficient lineup is of value to us so long as we have the right product mix in our showrooms," Lentz said in a statement.

Even Honda Motor, which has reported sales increases in the last few months as consumers flocked to its fuel-efficient cars, said sales fell 2 per cent in July. Honda's car sales were up 14 per cent, but results were dragged down by a 22 per cent drop in truck and four-wheel drives sales. Honda said it was adjusting production to match increasing consumer demand for cars such as the Civic, which saw sales drop 4 per cent for the month.

Nissan Motor was the only major automaker to report a gain in July, with truck sales up a surprising 18 per cent thanks in part to the new Rogue crossover. Nissan's overall sales rose 8.5 per cent.

The weak US economy and rising petrol prices have taken a toll on sales all year, but the latest wrinkle to hit the market came last month, when Chrysler said its financial arm would get out of the leasing business by the end of July because economic conditions have made leasing more expensive than buying for both consumers and the company. Automakers have had to take losses on trucks and four-wheel drives that come off lease because their value has declined far more than projected.

Ford then told dealers it would raise the price of leases on some trucks and four-wheel drives, while GMAC Financial Services said it would stop offering leasing incentives in Canada. GM also warned dealers that changes to leasing in the US could be coming later this year.

Farley said it was too early to say exactly how Ford's leasing changes will affect sales, but he said he doesn't expect a big impact because automakers will start making up for lower leasing rates with an escalation of incentives.

That rush began on Friday, when Chrysler announced new incentives for August intended to soothe customers who had planned to lease a vehicle, including a 72-month financing plan with monthly payments similar to those of 36-month lease payments. Buyers can also get up to $US2,000 ($A2,126) cash on some models.

AP reports unadjusted auto sales figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 26 sales days last month, two more than in July 2007.